Choose if the given statement is true/false.

As credit is used in different types of economic activities, it will lead to an increase in the production of goods and services.

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True

False

answer is A.

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Detailed Solution

The statement is true.
As credit is used in different types of economic activities, it will lead to an increase in the production of goods and services. These types of economic activities involve setting up a business and purchasing raw materials, machinery, land, capital, and investments in cars, housing, etc. Cheap and affordable credit can be used to set up small-scale or cottage industries. A farmer can take credit for purchasing new machinery and agricultural inputs that will substantially increase their production. Credit can also be used by manufacturers to purchase raw materials, implement new technology for production, pay wages to labourers, etc. Thus, credit helps them to produce goods without the hassle and more feasibly.

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